PERSPECTIVE MANAGEMENT

Lecture 3. Decision Making

We try to you understand

1.That decision making as a rational process. 2. The development of alternative courses of action 3. The selection from among alternatives. 4. The differences between programmed and nonprogrammed decisions. 5. Decisions made under conditions of certainty, uncertainty, and risk. 6. The importance of creativity and innovation in managing. 7. The major principles, or guides, for planning
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Decision Making
Decision making is defined as the selection of a course of action from among alternatives followed by action to implement decision Decisions are a result of processDecision making PROCESS can be equally or more important
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Decision Making Process

1. 2. 3. 4. 5. Stimulus (Trigger) Event Problem definition Gathering Information Identifying alternatives, Evaluating alternatives in terms of the goal sought, and 6. Choosing an alternative, that is, making a decision while keeping second option alive
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Limited, or "Bounded," Rationality

Limitations of information, time, and certainty limit rationality, even though a manager tries earnestly to be completely rational Satisficing is picking a course of action that is satisfactory or good enough under the circumstances
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Development of Alternatives and the Limiting Factor

A limiting factor is something that stands in the way of accomplishing a desired objective The principle of the limiting factor: By recognizing and overcoming those factors that stand critically in the way of a goal, the best alternative course of action can be selected
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Quantitative and Qualitative Factors

Quantitative factors are factors that can be measured in numerical terms Qualitative, or intangible, factors are those that are difficult to measure numerically

Marginal Analysis
Marginal analysis is to compare additional revenues and the additional cost arising from increasing output

Cost Effectiveness Analysis

Cost effectiveness analysis seeks the best ratio of benefit and cost

Selecting an Alternative: Three Approaches

When selecting from among alternatives, managers can use: 1. Experience, 2. Experimentation, and 3. Research and analysis.

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Decision aprocess
1. 2 Under Certainty All information available and is reliable Cause-Effect relationship known Under Certainty Data Meagre Data reliability not known Evaluation of relationship among variables unknown
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Decision Making-Uncertainty
APPROACHES a) Risk Analysis: Make a best Estimate.Data itself could be estimates.Estimate size of risk b)Decision Tree:Probabilities of events ocurring in each alternative is estimated.Best estimate is accepted c)Preference/utility theory
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Decsion Making-Under Risk

Factual Information available, but could be incomplete Approaches Complex mathematical methods Subjective probabilityexperience/judgement Other factors in decision making:Personal Values,personality ,Organisation culture
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Ideal Decision
Should be correct As needed Economical ALWAYS EXAMINE AND REEXAMINE ALTERNATE COURSE OF ACTION

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Decision Making
While taking decision make sure that The importance of decision is realised and taken care of. The Impact on people is carefully considered Whether decision leads to a course of action is accounted Dont decide unconsciously first and then search for alternatives
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Programmed And Nonprogrammed Decisions Programmed decisions are used for structured or routine work Nonprogrammed decisions are used for unstructured, novel, and ill-defined situations of a nonrecurring nature

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What Type of Manager are You?

Managers use two methods for collecting information:Sensing(S) and Intuition(N) Managers use two methods of evaluating information: Thinking(T) and Feeling(F)

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Decision Making
Type of Problem:Structured or programmed;Non structured or nonprogrammed Strategy Used:Rational:Manager examines a large number of option;weighs pros and cons of all e.g whether to introduce a new product OR Strategy used could be Inn cremental :alternatives are almost indistuishable from one another
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TYPES OF PROCASTINATORS
Perfectionists Dreamers Worriers Crisis Makers Defiers Overdoers
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How to deal with procastinators &how to deal with you if you are one 0f them
Prioritise and stick Make &review To do list/diary Set specific time goals/dates Reward self to get boring tasks done Delegate where possible Use the concept of sunk time Evaluate alternatives-positives/negatives Identify costs to you others What I must do VS what I like
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Criteria for Thoroughness

Canvass wide range of alternatives Survey full range of objectives and values implicated by choice Weigh cost/risk of consequences Recognise limiting factor Search new information Assimilate new information,expert opinions Re examine ALL alternatives Make provision for implementation
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GROUP DECISION MAKING

ADVANTAGES Knowledge/information pool More alternatives Participation,hence acceptance DISADVANTAGES Longer decision time May evaluate fewer option Domonation by few Members may expect participation in implementation NO DECISION!
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GROUP DECISION MAKING TECHNIQUES

Brainstorming Nominal Group Tachnique(NGT) Brainstorming Pool Collective note book Quality Circles

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Creativity and Innovation

Creativity refers to the ability and power to develop new ideas Innovation means the use of new ideas

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The Creative Process

1. 2. 3. 4. The creative process is seldom simple and linear It generally consists of four overlapping and interacting phases: Unconscious scanning Intuition Insight Logical formulation or verification

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Rules for Brainstorming

1. No ideas are criticized 2. The more radical the ideas are, the better 3. The quantity of idea production is stressed 4. The improvement of ideas by others is encouraged

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